Egypt Finance Minister Mohamed Maait stated recently that the nation’s top objective is to bring inflation under control to within the central bank’s target. He also predicted that economic growth will accelerate to 4.2% in the upcoming fiscal year beginning in July 2024, up from 2.8% in the current one.
Additionally, according to Mohamed Maait, the Abdel Fattah El-Sisi government wants to sell off additional state assets to lessen the role of the state in the economy, give the private sector more ownership, boost productivity, and raise money to pay down Egypt’s debt.
The Gaza conflict has harmed Egypt’s economy during the past six months by slowing down the rise of tourism and decreasing earnings from the Suez Canal, two of the nation’s main sources of foreign exchange. Speaking at the IMF Governor Talks series in Washington, Mohamed Maait stated that revenue from the waterway has decreased by over 60%.
Egypt depreciated its currency considerably, announced that it would switch to a flexible exchange rate, and signed a record-breaking USD 35 billion investment deal with a UAE sovereign wealth fund in response to the issues, which forced the IMF to increase Egypt’s financial support to USD 8 billion.
The rate of inflation dropped from a record 38.0% in September to 33.3% in March 2024, which is significantly higher than the central bank’s long-term aim of 5% to 9%.
Over the previous ten years, Egypt has created development by using foreign debt to fund massive governmental projects, such as a new USD 58 billion capital in the desert.
According to Mohamed Maait, the government wants to cut interest rates to minimise interest payments on debt. The central bank has increased overnight interest rates by 800 basis points so far in 2024.
Mohamed Maait noted that the government has set a cap of one trillion Egyptian pounds (USD 20.6 billion) on all public investments, exclusive of the military. According to him, the private sector needs to account for at least 65-70% of the economy.
“It is to the state’s advantage to give the private sector the primary role in governing the nation. Why? Because every year, about a million young people enter the labour force in search of employment,” Mohamed Maait stated.